That’s because the reason the Yahoo stock has ridden so high has nothing to do with Mayer’s performance and everything to do with a 40% stake in Alibaba (NYSE:BABA) acquired by co-founder Jerry Yang for $1 billion in 2005. Mayer has whittled that down to 15% of the Chinese company.

What Marissa Mayer Built

Mayer spent the cash trying to build Yahoo, acquiring over 50 different companies, with names like Dapper, Astrid, and Rockmelt. The biggest was Tumblr, a blogging engine that cost $1.1 billion and has become the heart of its user interface. The best known was Summly, a news aggregator that cost $30 million and whose founder was then 17.

At Google (NASDAQ:GOOGL), where she spent the bulk of her career, Mayer was known for building great professional teams and products like Google Maps, Google Earth, and Google Street View, as well as failures like Google Health. Her eye for design was also credited with helping the Google look-and-feel.

But after more than three years at Yahoo its home page is still a jumble that reminds users of America Online in 2005. Yahoo remains a media company, an aggregator, the place where former CBS News anchor Katie Couric’s TV career went to die.

What is Yahoo Worth?

Still, there is a there, there. Yahoo will have about $4.8 billion in revenue during 2015. Over half usually makes it to the “gross profit” line -- $747 million out of $1.243 billion during the June quarter alone. But after general expenses and a research budget of $1.2 billion/year is taken out, the net income is negligible – a loss of 2 cents/share in June, a gain of 2 cents/share in March.

Then there is the Alibaba stake. Mayer tried to spin it out in a tax-free entity but the IRS questioned the idea this week, the company’s chief accounting officer resigned, and Yahoo still has the stake.

That leaves Yahoo itself with an equity value of about $5 billion, dirt cheap by tech standards. Given what has been spent to build that, however, the knives are out for Mayer. NYU Business School professor Scott Galloway said this week Yahoo should be “euthanized” and that Mayer is "the most overpaid CEO in history."

Is Yahoo stock a Buy?

So do you want to get into the middle of this mess? Based on its own fundamentals – net income of $3.9 billion on sales of $12 billion for the year ending in March at the current Yuan/Dollar exchange rate of 6.3 – Alibaba stock is full priced, but not overpriced. A decent September quarter, which its management has not promised, could send the stock skyrocketing. Based on its own results, Yahoo stock should be worth double its current valuation as a media company, and could be profitably sold to a Comcast (NASDAQ:CMCSA) or even a Verizon (NYSE:VZ) as a digital add-on.

The question is whether Mayer will be able to extract that value, whether Yahoo’s board will take the reins from her and do it, and whether you want to wait for that drama to play out.

Personally, I’d say it’s worth a tumble, if you have some mad money that isn’t doing anything.

Yahoo Stock Articles & Video

Google continues to launch new applications to innovate and acquire new revenue streams. EU antitrust charges on android is a major concern, which may affect the stock price in the short term. Valuation shows some mixed signs - the stock appears to be relatively inexpensive but may also not a bargain.

Yahoo shares have been sliding since the company uncovered a massive data breach. Verizon, which had agreed to purchase Yahoo's core, is likely to use this revelation to renegotiate the price lower. After gaining nearly 30% YTD, do Yahoo shares have any upside left?

Verizon will acquire Yahoo's operating business for $4. 83 billion in cash. The acquisition follows the 2015 acquisition of AOL. Yahoo web properties, including email, News, Sports and Finance, have 200 million unique monthly visitors, many of them on mobile devices. Verizon wants to be a top global mobile media company, and accelerate its revenue stream in the $187 billion digital advertising market.

Yahoo reported Q2 earnings and refused to disclose further info about the sale process. The Mozilla payment clause, Tumblr write-off, and weak core results put pressure on the deal price. Even though the sale will be closed soon, investors should be ready for a downside scenario.

After an endless process to sell the company’s core business, Yahoo is finally approaching the end. Yahoo will announce the third bidding round results and acquisition terms. Operating results are secondary to the selling process announcement.

The views expressed in the article are of individual authors and are not necessarily supported by Amigobulls.We do not hold any stake in the aforesaid stocks. Please read our detailed disclaimer.

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